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Practice Set for Chapters 1,2,3
Name_Tyronda Hayes_
Please answer all of the following problems by typing the numerical solution into the space provided beneath each question. You
will want to review the solutions to the similar end of chapter problems be

Practice Set for Chapters 6 and 7
Hayes_
Name_Tyronda
I STRONGLY ENCOURAGE YOU TO REVIEW THE END OF CHAPTER PROBLEMS AND EXCEL SOLUTIONS
(ATTACHED TO THE COURSE) BEFORE ATTEMPTING THESE EXERCISES. And I do not resort to all caps
often.
Please answer all o

Chapter 5: Risk Analysis in Capital Budgeting
Shapiro: CHAPTER 5 QUESTIONS
1. Comment on the following statements:
a. Because our new expansion project has the same systematic risk as the firm as a
whole, we need do no further risk analysis on the project

CHAPTER 6: PROBLEMS
1. Ampex common stock has a beta of 1.4. If the risk-free rate is 8 percent, the expected market
return is 16 percent, and Ampex has $20 million of 8 percent debt with 10 years until
maturity. It has a yield to maturity of 12 percent a

Chapter 3: Estimating Project Cash Flows
Shapiro CHAPTER 3: ESTIMATING PROJECT CASH FLOWS
QUESTIONS
1. A new investment project is to demolish an existing gas station and construct a small
shopping mall. Which of the items should be treated as incremental

Chapter 4: Real Options and Project Analysis
Shapiro CHAPTER 4: QUESTIONS
1. Imagine that the price of copper rises to the point that the copper value of a penny is worth
more than $.01. As a result, pennies disappear from circulation. Your firm uses copp

ch13q1
Latin America had a very large interest in Nike, most likely due to increased marketing, but irregardless
there was a large demand, which also allowe Nike to expand internationally. Nike would also be able to
produce their product at a much lower c

Week 2
Estimating Project Cash Flows
Finc-5810 Joao
1
Incremental CFs
Shareholders are interested in how many additional dollars they
will receive in the future for the dollars they lay out today
What matters to them is not the projects total CF per perio

Name _
Final Exam Minicases/ Problems Chapters 11,12,16,17,18,21,25
Please type your numeric answers in the spaces below. Please do your own work and do
not share your answers with others. Thank you and good luck.
1.
We will open a business that requires

Final Exam Chapter 11,12,16,17,18,21,25
Name_
Please Boldface and Underline the correct response. Thank you and good luck.
1.
True False While there have long been attempts to reduce risk to concrete measures, we are not yet to the point where any
one mea

Answer Key Capital Budgeting Reading Quiz - Chapters 21 and 25
1. Why do companies like John Deere and Caterpillar run leasing subsidiaries?
They do this to sell more equipment. In addition, they have superior information about the resell market and addit

Name_
Capital Budgeting Reading Quiz - Chapters 21 and 25
Please type your answers in the spaces provided. Thank you and Good Luck.
1.
Why do companies like John Deere and Caterpillar run leasing subsidiaries?
2.
From the lessors point of view, are leases

ch19
1
Logan couls use a letter of credit that was issued by the bank on behalf of his distributor
that promises that the Sports Exports company will be paid once the shipping documents are
presented. This means that the letter holds the place of the dist

ch1q1
Oakley would have the more prominent agency problems than Berkley
because a decentralized agency facilitates better use of the local markets
information. This same advantage also lends to the disadvantage of
having agency problems and lack of commit

ch21q8
Fort Collins should invest cash into the US because using the $1 million would get you 8,333,333 pesos
only accumulating to 8,458,333. If it then converted back to dollars it would only go back to $845,333
which is less than the original value.
q14

ch16q7
No, I dont believe so. Because the program is not designed to be flexible
the weights it has for certain values will not be country specific. This being
the case, they will definitely assign improper values to some critieria.
q10
Some methods inclu

ch10q1
Only firms that deal with international transactions have to worry about Transaction exposure.
This is different than economic exposure where this includes any form where the business cash
flow would be affected. If competition increases in another

ch14q1
If the parent company is determining whether or not to make an investment, they have to look at it from the
perspective of what is best for the parent as a whole. It might benefit the subsidiary but might
not benefit the whole company. Other factor

ch4q1
-4.05%
Expected depreciation is 4.05%
q3
a.
b.
c.
Demand for pounds should increase
supply of pounds for sale should decrease
if you have lowering interest rates then the pounds value should increase
q10
I belive it has to do with supply and demand

ANSWER KEY Capital Budgeting Reading Quiz - Chapters 16, 17 and 18
1.
Martin Corporation is financed with 40% debt and 60% common equity. The after tax cost of debt is 10% and the cost of
common equity is 14%. What is Martins weighted average cost of capi

ANSWER KEY - Practice Set Chapters 16,17,18
1.
Please use the rate function in excel to solve this problem. Martin Inc.s bonds will mature in 10 years. The coupon
interest rate on the bonds is 6.75 percent, paid at the end of each year. The bonds have mat

Name_
Capital Budgeting Reading Quiz - Chapters 4, and 5
Please answer the questions below in the spaces provided. Thank you.
1.What is the difference between value and price?
2. What is the difference between the yield to maturity and the yield to call?

Answer Key Capital Budgeting Reading Quiz - Chapters 6 and 7
1.
What type of company would be less interested in using the modified internal rate of return (a large company with a lot of
cash or a small private company that is reinvesting every dollar)?
T

Answer Key Capital Budgeting Reading Quiz - Chapters 1,2,3
1. What are agency problems, and between what two stakeholders do agency problems typically occur?
Agency problems occur when the agent (manager) is employed to act on behalf of the principal (the